British accounting firm BDO highlights the fact that the U.K. economy will be extremely weak as far out as 2015, with ‘uncomfortably high’ risk of a double dip recession, according to a ‘Transitions’ report released today.
To make things worse, there are far too many similarities between the U.K. today and Japan pre-deflation.
“Economists seem to believe there is only a remote possibility that the UK could follow the Japanese 1990s route into stagnation. But with no scope for further fiscal easing, interest rates at 0.5 per cent and £200bn of QE already in place, there is little more that the authorities can do to prevent such an outcome. So if banks remain reluctant to lend and households and businesses remain reluctant to borrow, it seems to me the risk of a Japanese- style outcome should not be easily dismissed.”
Yet the real crux of the report is that British board rooms remain largely oblivious to the risks ahead — BDO found that as much as 44% of British corporate board members believe business will soon be back to ‘pre-recession normality’.
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